Viacom, Inc. (VIAB) is set to release its third-quarter fiscal 2014 financial numbers before the opening bell on Aug 6, 2014.
In the last reported quarter, the company’s earnings had surpassed the Zacks Consensus Estimate by a margin of 3.85%. Let’s see how things are shaping up prior to this announcement.
Factors to be Considered this Quarter
The cable TV industry in the U.S. is highly matured and saturated. Viacom’s flagship cable channels are already distributed and therefore scope to increase revenues by expanding distribution channels is limited. This reflects the company’s need to sequentially improve its cable channels’ ratings to boost its top line. Simultaneously, Viacom must diversify its geographic presence in order to compensate the saturated domestic market.
Moreover, rising distribution expenses coupled with uncertainties in the movie business will continue to act as headwinds for the company in the coming quarters.
Earnings Whispers?
Our proven model does not conclusively show that Viacom is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: Viacom has a negative Zacks ESP. This is because the Most Accurate estimate stands at $1.43 while the Zacks Consensus Estimate is pegged higher at $1.44. This leads to an ESP of -0.69% for Viacom.
Zacks Rank: Viacom carries a Zacks Rank #4 which further decreases the predictive power of ESP. Moreover, we caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing a negative estimate revision momentum.
Other Stocks to Consider
Here are some companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter.
Time Warner Inc. (TWX) has an earnings ESP of +1.19% and holds a Zacks Rank #3.
TELUS Corporation (TU) has an earnings ESP of +1.85% and carries a Zacks Rank #3.
RigNet, Inc. (RNET) has an earnings ESP of +6.25% and carries a Zacks Rank #3.
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